Price Elasticity of Demand
Quiz by Koen De Mulder
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- Q1
True or False: The price elasticity of demand is greater for goods that have several rather than fewer close substitutes
truefalseTrue or False30s - Q2
True or False: Total spending on a product decreases as price falls when the demand curve is price elastic
truefalseTrue or False30s - Q3
True or False: A vertical demand curve can be described as perfectly elastic
falsetrueTrue or False30s - Q4
True or False: When the demand curve for a product is elastic, relatively more of a tax on the production of the good will be borne by producers
truefalseTrue or False30s - Q5
True or False: Demand for a product will tend to less price elastic in response to a price change in the long run compared to the short run
falsetrueTrue or False30s - Q6
True or False: If the demand for a product is perfectly inelastic, a rise in market supply will only cause a fall in market price and no change in production
truefalseTrue or False30s - Q7
Suppose that the price elasticity of demand for a product is estimated to be 0.6. The demand for the good is
Elastic
Perfectly elastic
Perfectly inelastic
Inelastic
30s - Q8
Suppose that price of Good X rises by 30 per cent and demand for Good X falls by 10 per cent. Elasticity of demand is
-1.33
-0.33
-3
-30
30s - Q9
The demand for a product will tend to be elastic when:
It is subject to habitual consumption
The consumer regards the product as a necessity
It has few close substitutes in the market
The purchase of a good takes up a high proportion of a consumers' budget
30s - Q10
Which one of the diagrams above, A, B, C or D shows a demand curve that is perfectly inelastic?
C
B
D
A
30s - Q11
The demand for orange juice is found to have a price elasticity of demand equal to -1.8. If there is a severe frost which destroys large quantities of oranges we expect to see
An increase in the market price and no change in spending
A rise in the market price and a fall in spending on orange juice
No change in the market price and no change in spending
A fall in the market price and a rise in spending on orange juice
30s - Q12
Ratko loves chocolate truffles. As the market price of a truffle increases from 50p to 60p, Ratko continues to buy a dozen truffles every week to satisfy his wants. Ratko's demand for chocolate truffles is therefore
Unit elastic
Perfectly inelastic
Illustrated by a horizontal demand curve.
Elastic
30s - Q13
When the price of a DVD version of a new film is £12 per unit, 180,000 DVDs are demanded each week. The manufacturer estimates that the price elasticity of demand is (-) 1.4. If the price of the DVD were cut by £3, how many DVDs would be demanded at the new price?
243,000
215,000
220,000
200,000
30s - Q14
EasyJet cuts its fares on average by 14% and finds that the volume of passengers demanding flights on their services rises by 25%. As a result, the total revenue of EasyJet will
Increase because demand is price elastic
Remain the same as elasticity of demand = unity (1)
Increase because demand is price inelastic
Decrease because demand is price elastic
30s - Q15
A manufacturer reduces the price of his washing machines by 5% and, as a result, the volume of sales of washing machines rises by 4%. The price elasticity of demand for the good is
Indeterminate from available information
-0.8
-1.25
-1.0
30s
